Market Overview

PreMarket Prep Stock Of The Day: Nio

PreMarket Prep Stock Of The Day: Nio

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

With the COVID-19 crisis dominating market action over the last few months, analyst rating changes have been in the background on PreMarket Prep.

When an analyst bags a round-tripper in less than a month on a widely followed issue, it does not go unnoticed, and that's what occurred Wednesday. 

The 21-day call in NIO Inc -ADR (NYSE: NIO) by Fei Fang of Goldman Sachs makes the Chinese electric vehicle manufacturer the PreMarket Prep Stock Of The Day.

The Company: Dubbed the Tesla Inc (NASDAQ: TSLA) of China, the company operates in the country's premium electronic vehicle market.

Nio designs, jointly manufactures and sells smart and connected premium electric vehicles, driving innovations in next-generation technologies in connectivity, autonomous driving and artificial intelligence.

The '60 Minutes' Top: Once "story" stocks make their way to the media and general public, they're often toast. 

On Feb. 24, 2019, "60 Minutes" featured Nio in a segment and portrayed the company as though it was poised to dominate the electric car market in the not-so-distant feature. 

After ending that Friday's session at $8.17, Nio rallied to $9 and the next day made its all-time-high at $10.64. It matched that high March 5, 2019, reaching $10.63.

The stock was cut by more than half by the end of March 2019, closing at $5.10. 

The issue did not bottom until October at $1.19 and rebounded to end the year at $4.02.

Nio Follows The Market In 2020: Before the broad market was rocked in late February and March, the issue was trading at the $4 area.

It was not spared from the indiscriminate selling in March, falling to $2.11. Nio revisited that level in April when it bottomed at $2.22. It should be noted that this level was over $1 higher than its October low.

Nio had already turned positive for the year, trading at $4.70, a few days prior to the Goldman Sachs upgrade.

Goldman Sachs Upgrades Nio June 3: On June 3, Goldman Sachs upgraded the stock from Neutral to Buy and announced a $6.40 price target.

During that session, the issue ended just off its high for the day at $5.60.

The issue more than participated in the broad market's rally in June and did not peak until Monday at $7.90.

Here Comes The Ax: Before the open Wednesday — and only 20 days after upgrading the issue — Fang downgraded Nio from Buy to Neutral and raised the price target from $6.40 to $7.

During the rapid-fire ticket analysis near the end of Wednesday's PreMarket Prep, the co-hosts were asked their opinion on the issue.

Co-host Dennis Dick minced no words.

“[With] Goldman buying low and selling high, I will go with Goldman. I would be a seller." 

The full discussion on the issue can be found here:

Corresponding Price Action: Following a lower open, Nio was unable to even clear Tuesday’s low ($7.19), peaking at $7.04.

The stock ended Wednesday's session down 5.18% at $6.86. 

Photo courtesy of Nio. 


Related Articles (NIO)

View Comments and Join the Discussion!

Posted-In: auto automotive China electric vehicles EVsNews Technicals Trading Ideas Best of Benzinga